Advantages and Disadvantages of an IVA Agreement

Advantages and Disadvantages of an IVA Agreement

You find yourself struggling to keep up with the monthly repayments that you need to keep making to all of your creditors. Naturally, you are going to look for some sort of solution to help get you out of the financial predicament that you are in. An increasingly popular method of doing this is by setting up an Individual Voluntary Arrangement or IVA agreement. This can be an extremely effective way of alleviating your debt problems but it is important that you understand the ins and outs. Below we have highlighted some of the main good and bad points associated with these arrangements.

Advantages.

By setting up a debt payment plan in this way, you will only have to make one payment each month, this will be calculated specifically for you so that it is affordable.

You will usually find yourself debt free within 5 years, the time period may be a lot shorter than this but 5 years is usually the maximum time that any arrangement is made for.

Once the arrangement has been set up, all interest and late payment fees on your debt will be stopped, this again can be invaluable to lowering your debt levels.

You do not have to deal with any correspondence from your creditors after setting up the payment plan. If you receive any phone calls or letters then you simply pass the details on to the company managing your arrangement.

Disadvantages.

These agreements are only available to people whose overall level of debt is more than 12,000. If your debt is lower than this then you need to look for another alternative.

Your credit rating is going to be severely affected, you will be unable to borrow for the length of the agreement and may struggle for some time afterwards.

When you compare it to filing for bankruptcy, it is 5 years instead of 3 and you will be have to pay back a lot more than if you went bankrupt.

During the course of the agreement you will not be able to use any unsecured credit, this means no store cards, credit cards etc can be used.

Obviously if you are considering an IVA agreement then you should do thorough research into the subject first. If you have weighed up all of the pros and cons and still want to go ahead with it then make sure you look for a reputable firm to get you on the road to being debt free.

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